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www.larespana.comCorporatePresentation December 2016
Index
Company Description
Portfolio Retail Strategy Non-Retail Strategy
01 02 03 04Financial Results
05Closing Remarks
06
3
The Company: Lar España
The Manager: Grupo Lar
01 Company Description
As Termas Shopping Centre, Lugo
4
Snapshot
First IPO of a Spanish REIT listed on the Spanish Stock Exchange First IPO of a Spanish REIT listed on the Spanish Stock Exchange
Focused on creating both sustainable income and strong capital returns for shareholders
Focused on creating both sustainable income and strong capital returns for shareholders
Lar España is externally managed by Grupo Lar, private Real Estate Asset Manager, Investor and Developer with a 40 year track record of international experience
Lar España is externally managed by Grupo Lar, private Real Estate Asset Manager, Investor and Developer with a 40 year track record of international experience
Lar España is a leader in retail, due to the size of the portfolio and the quality of the assets as well as the capacity and quality of its management
Lar España is a leader in retail, due to the size of the portfolio and the quality of the assets as well as the capacity and quality of its management
A clear investment opportunity in a unique shopping experience platform A clear investment opportunity in a unique shopping experience platform
Shareholder Structure
PIMCO20.03%
BrandesInvestment
Partners3.0%
Franklin Templeton Institutional
15.1%
BestinverGestion
4.2%
Columbia Threadneedle
5.2%Blackrock Inc.
3.1%
Management3.5%
Other investors46.1%
3M15IPO March 14 3M14
1. SC Txingudi2. SC Las Huertas
9. LW Alovera II10. SC Portal de la Marina11. OF Egeo12. RU Nuevo Alisal13. RU Hypermarket
Albacenter14. OF Eloy Gonzalo
3. OF Arturo Soria
12M149M14
15. RE Lagasca99
6M15 9M15
16. SC As Termas17. LW Alovera III18. LW Alovera IV19. LW Almussafes20. SC Hypermarket Portal
de la Marina21. OF Joan Miró
3M16
22. SC El Rosal23. RU Galaria24. RC VidaNova
Development25. RC Megapark
12M15
4. OF Marcelo Spinola5. SC Albacenter6. SC Anecblau7. LW Alovera 8. RU Villaverde
26. SC Palmas AltasDevelopment
27. SC Remaining Stake in Portal de la Marina
28. RP Vistahermosa
6M16
5
Major milestones since 2014
9M16
28. SC Gran Vía de Vigo
6M14
€1.2 Bn of assets in 28 acquisitions since IPO
6
RetailRetail OfficesOffices LogisticsLogistics ResidentialResidential
14%GAV14%GAV
6%GAV6%
GAV5%
GAV5%
GAV
Top retail player
Leading Shopping Centres in their catchment area
Retail parks with proven demand and profitability potential
Good quality properties with excellent access and visibility
Offices in consolidated locations of Madrid and Barcelona with good connections / public transport
Recurrent activity with selective rotation
Focus on logistic properties on a selective basis with low rents, low capital values and high yields
Development of first homes in niche markets without zoning risk, limited supply and clear demand
75%GAV75%GAV
MALL
Retail platform + non-retail assets
7
GAV (€ Mn)
1. Total GAV = Valuation of assets as of 30th June + acquisition price Gran Vía de Vigo + invested Capex (€10 Mn)2. Marcelo Spínola’s EPRA NIY and EPRA Occupancy rate is not calculated due to the lack of representativeness. To calculate the NIY for the total portfolio we have excluded the data from Marcelo Spínola
6.2%
2.9%2
7.0%
6.3%
4.4%
7.2%
EPRA Net Initial Yield: 5.8% & EPRA Topped-up NIY
Retail
Offices
Logistics
92.6%
88.5%2
100.0%
EPRA Occupancy Rate: 92.8%
Retail
Offices
Logistics
Main Figures
Retail75%
Offices14%
Logistics6%
Residential 5%
€1,2011
Developments10%
Rental Properties90%
€1,2011
Retail85%
Offices7%
Logistics8%
€62.7
EPRA Annualized Net Rent (€ Mn)
Strengths
Unique exposure to real estate retail assets and the Spanish consumer recovery
Resilient prime dominant shopping centers in attractive catchment areas
Recurrent cash flow generation from a 6.6% Net Initial Yield on cost
Upside potential from acquisitions done at attractive capital values with potential for revaluation
Upside from our value added approach including repositioning and selectively development to create unique shopping experience destinations
A complementary opportunistic approach on logistics and offices investments
Proven recurrent access to off-market transactions
Top management team with strong track record and delivering results
8
Lar España Strategy9
CAPITAL STRUCTURE
CAPITAL STRUCTURE
MANAGEMENTMANAGEMENT
COMPANYCOMPANY
Company’s business strategy is to acquire primarily retail property with high return potential for rental purposes
First IPO of a Spanish REIT listed on the Spanish Stock Exchanges
Focused on creating both sustainable income and strong capital returns for shareholders
Diversification of sources of funding including bank and debt capital markets
Highly compelling2.24% cost of debt
Back loaded debt amortization profile
Special focus on under managed assets
>100 Real Estate experts contributing
to Lar España’s value delivery
Real Estate Manager with objective of implementing an Active Management
Strategy in order to deliver “Alpha”
35% Net LTV
Locations
Locations selected based on:
Level of competition Current GDP per capita and future growth outlook Impact of tourism as an additional factor in some assets
Locations
Locations selected based on:
Level of competition Current GDP per capita and future growth outlook Impact of tourism as an additional factor in some assets
Strength of the portfolio
Strength based on: Size of the portfolio (top-3) Average size of the centres (2nd in Spain) Quality and attractiveness of assets
Strength of the portfolio
Strength based on: Size of the portfolio (top-3) Average size of the centres (2nd in Spain) Quality and attractiveness of assets
Unique platform
A unique platform, which provides an attractive position with retailers and the opportunity to consolidate existing economies
of scale
Unique platform
A unique platform, which provides an attractive position with retailers and the opportunity to consolidate existing economies
of scale
Key assets in their catchment areas
Prime assets in their area of influence Close to 500,000 sqm GLA
Key assets in their catchment areas
Prime assets in their area of influence Close to 500,000 sqm GLA
Focus on shopping centres and retail parks
Retail Assets10
Non-Retail Assets
Focus on value added assets
Management as a key element to make acquisitions and generate differential value, taking advantage of Grupo Lar’s
platform in Spain
Focus on value added assets
Management as a key element to make acquisitions and generate differential value, taking advantage of Grupo Lar’s
platform in Spain
Asset Rotation
Rotation of assets held for at least three years based on value generation and returns
Asset Rotation
Rotation of assets held for at least three years based on value generation and returns
Development
Using experience and capacity of development as a differentiating element to achieve better returns with moderate
risk
Development
Using experience and capacity of development as a differentiating element to achieve better returns with moderate
risk
Core locations
Luxury residential for sale Offices in Madrid and Barcelona Logistics in main markets as a good complement to retail
Core locations
Luxury residential for sale Offices in Madrid and Barcelona Logistics in main markets as a good complement to retail
Opportunistic approach to other assets
11
All assets
12
Corporate Governance as a priority
Lar España has prioritized best-in-class corporate governance
Pledge to guarantee that the Company’s governance structures are adequately integrated and functioning as intended Pledge to guarantee that the Company’s governance structures are adequately integrated and functioning as intended
Objectives of the Action Plan 2014-2016
Transparency Business ethics Corporate social responsibility
Transparency Business ethics Corporate social responsibility
Director activities Selection and Remuneration Training
Director activities Selection and Remuneration Training
Regulatory compliance Evaluating & improving
board’s performance Regular reporting
Regulatory compliance Evaluating & improving
board’s performance Regular reporting
Ensuring strong governance Transparency in management Continuous monitoring
13
José Luis del Valle
Chairman and Independent Director
Pedro Luis Uriarte
IndependentDirector
Roger Cooke
IndependentDirector
Governance StructureIndependent and experienced Board: 4 independent directors (4 out of 5)
Critical Activities internalized
Sergio Criado
CFO
Susana Guerrero
Legal Manager
Jon Armentia
CorporateManager
Alec Emmott
IndependentDirector
Juan Gomez-Acebo
SecretaryNon Member
Hernán San Pedro
Head of Investor Relations
José Díaz Morales
Interim Internal Audit
Miguel Pereda
Grupo Lar
14
The Company: Lar España
The Manager: Grupo Lar
01 Company Description
Anecblau Shopping Center ,Barcelona
Grupo Lar Snapshot
Stable Ownership & Governance
Strong Management Team
Geographical Diversification
Product Diversification
Reliable manager and Partner of third party funds
Strong Balance Sheet
1
2
3
4
5
6
A Real Estate Reference in Spain
Family owned Company with more than 40-year of track record
+270 employees in 7 Countries
Long history of Real Estate of Residential, Shopping Centres and Office development
Gentalia, one of the foremost Shopping Centre Operators in Spain
15
Long track record of experience investing, developing and managing shopping centres, offices, logistics and residential buildings
16
Experience in all asset classes
ResidentialResidential
shopping centres invested, developed or managed
RetailRetail
Historic Investment Volume:
€1,509 Mn
GLA 972,626 sqm
10,000 residential units sold in the last 10 years
15,000 Units managed
39
LogisticsLogisticsOfficesOffices
Industrial Parks developed since 2003
Specializing in the concept of Industrial Park
9 10office buildings developed and managed
>140,000 sqm
Madrid & BCN
17
Successful international experience
Retail co-investments – Joint Ventures with Tier 1 Investors
Whitehall MSREF
Commitment and exclusivity18
Contract Summary
Grupo Lar is contracted to exclusively provide Management services to LRE. Initial five-year contract
The Manager is committed to exclusivity for commercial property investment opportunities in SpainIn the Residential sector in Spain, Lar España has the right to co-invest with the Manager
Real Estate related activities and expertise provided by the Manager. Critical activities reside in Lar España
Manager
1
2
3
New base fee scheme
1.25% on EPRA NAV up to €600 Mn
1% on the EPRA NAV > €600 Mn
To be paid in shares with a lock-up period of 3 years
Grupo Lar now owns a 3.5% stake in Lar
España, subject to a lock-up
period
02 Portfolio
Vistahermosa Retail Park, Alicante
Portfolio distribution20
Location by asset class
75% GAV
15 RETAIL
14% GAV
5 OFFICES
6% GAV
5 LOGISTICS
5% GAV
1 RESIDENTIAL
1
4
11
5
17
1819
21
10
16
2
3
26
6
24
2023
22
25
7
13
14
12
15
8
9
Megapark P. Marina El Rosal Anecblau As Termas Gran Vía Vigo Vistahermosa
Dominant in its catchment area
Value Added Potential
Occupancy Tenant mix
Extension Reposition
Tenant mix Reposition
Reposition Occupancy Extension
Tenant mixExtension
Occupancy Reposition
% of High Quality Tenants1
1. Yield on Cost for Palmas Altas is based on an estimation by the company2. GLA of international retailers, franchises and retailers with multiple points of presence in Spain, as % of total GLA, excluding vacancies 3. As of 2016 Q2, Cushman & Wakefield and JLL. Gran Vía de Vigo acquisition price. 4. Catchment area may differ between assets depending on the amount of inhabitant living within a driving distance5. Excludes the Hypermarket
EPRA NIY 5.7% 6.6% 6.7% 5.4% 6.7% 6.2% 5.9%
Bilbao100% RP+FOCRetail Complex
63,555 sqm€178 Mn
92.0%10 Mn3 Mn
LocationOwnershipAsset TypeGLA2
GAV3
EPRA OccupancyFootfallCatchment Area4
Alicante Coast100%
Shopping Centre40,166 sqm
€99 Mn93.5%3.8 Mn216,000
Ponferrada100%
Shopping Centre51,022 sqm
€93 Mn92.4%5.5 Mn200,000
Great BCN100%
Shopping Centre28,612 sqm
€88 Mn94.2%5.5 Mn1 Mn
Lugo100% SC5
Shopping Centre35,127 sqm
€74 Mn92.9%3.8 Mn250,000
Vigo100%
Shopping Centre41,386 sqm
€140 Mn95.5%7.2 Mn482,100
Alicante City100%
Retail Park33,550 sqm
€43 Mn87.6%4.4 Mn466,000
98% 95% 89% 98% 99% 100% 100%
Palmas Altas
Development
8.0%1
Seville100%
Shopping Centre123,000 sqm
€41 MnN.A.N.A.
1.5 Mn
n.a.
21
Retail portfolio largest assets: 64% GAVLAR España largest assets represent
90% of its retail GAV
22
Retail portfolio mid assets: 11% GAVAlbacenter Vidanova Parc Las Huertas Nuevo Alisal Villaverde Galaria
Dominant in its catchment area
Value Added Potential
OccupancyTransformation
Dominant Development
Renovation Occupancy
Security Security Security
% of High Quality Tenants1
EPRA NIY 6.0% 9.2%1 6.4% 6.5% 6.5% 6.7%
Albacete100%
Shopping Centre27,890 sqm
€46 Mn90.4%4 Mn
402,837
LocationOwnershipAsset TypeGLA2
GAV3
EPRA OccupancyFootfallCatchment Area4
Sagunto100%
Retail Complex43,091 sqm
€16 MnN.A.N.A.
243,000
Palencia100%
Shopping Centre6,267 sqm
€12 Mn78.3%5.5 Mn200,000
Santander100%
Retail Units7,649 sqm
€18 Mn100%N.A.
262,595
Madrid100%
Retail Unit4,391 sqm
€10 Mn100%N.A.
250,000
Pamplona100%
Retail Units4,108 sqm
€10 Mn100%N.A.
343,480
85% 90% 70% 100% 100% 100%
Txingudi
Retenanting Renovation
6.5%
Guipúzcoa100%
Shopping Centre10,127 sqm
€32 Mn86.3%4 Mn
91,351
80%
LAR España mid assets represent
10% of its retail GAV
1. Yield on Cost for Vidanova Parc is based on an estimation by the company2. GLA of international retailers, franchises and retailers with multiple points of presence in Spain, as % of total GLA, excluding vacancies 3. As of 2016 Q2, Cushman & Wakefield and JLL. Gran Vía de Vigo acquisition price. 4. Catchment area may differ between assets depending on the amount of inhabitant living within a driving distance
Non Retail Assets Portfolio: LRE 25% GAV
Non-Retail Assets
Offices Logistics Residential
Number of Assets 5 5 1
GLA (sqm) 50,345 161,841 9,453
EPRA Occupancy (%) 88.5%1 100% n.a.
GAV (€ Mn) 160 72 58
GAV (€/sqm) 3,178 445 6,168
Passing Rent (€ Mn) 4.6 5.5 n.a.
EPRA NIY (%) 2.9%1 7.0% n.a.
EPRA Topped-up NIY (%) 4.4%1 7.2% n.a.
23
1. Marcelo Spínola’s EPRA NIY and EPRA Occupancy rate is not calculated due to the lack of representativeness. To calculate the NIY for the total portfolio we have excluded the data from Marcelo Spínola
851
1,050
48
118 42
Acquisition &Revaluation 2014-15
Acquisitions H12016 Revaluation H12016 GAV
1. Market Value determined by JLL and C&W as of 30 June 20162. € m 1.201 included Gran Via de Vigo.
Valuation Bridge Since Acquisition€ Mn
Revaluation H1 2016
53%
47% Yield Impact
Management Impact
€42Mn
Aquisitions Revaluation
24
Valuation
(1)
1,201(2)
63
c.77
c.96
c.8c.4 c.2
c.4
c.14
Annualisednet rent
Reversionary potential –Market rent
Reversionary potential –Vacancy
Reduction
MarceloSpinola Office
Reversionarynet rent
VidanovaParc
(Sagunto)
Palmas Altas(Seville)
Potentialannualized
net rentcurrentplatform
FirepowerInvested at an
average of6%
Potentialannualized
net rent withgrowth
1
2
3 3
Existing Income Generating Assets
Existing Developments
4
Estimated Future Investments c.110
Portfolio Annualized Rental Growth25
c.13
1. Illustrative potential additional annualised rent calculated as the difference between the market net rent estimated in 1H 2016 by the Company’s appraisal done by Cushman & JLL, as part of their valuation exercise and the annualized net rent obtained by the Company in H1 2016. Difference applied only to the current occupancy rate, considering the occupancy rate of the Company's properties as of 30 June 2016
2. Illustrative potential additional annualised rent calculated, assuming the full occupancy of the Company's properties, as the application of the market net rent estimated by the Company’s appraisers in H1 2016 as part of their valuation exercise with respect to the vacant spaces in each of the Company's properties. Full occupancy has been estimated at 97% for Shopping Centres given structural vacancy and 100% for the remaining portfolio
3. Potential rent that may be derived from certain of the Company's assets under development (Sagunto and Palmas Altas) based on the announced yield at the moment of their respective acquisition (9.2% and 8.0% respectively) as applied to the acquisition price and building capex for each asset
4. Estimated Rental Income assuming an average yield of assets acquired @ 6%
03 Retail Strategy
Portal de la Marina Shopping Centre, Alicante
Asset Type Shopping centres and retail parksShopping centres and retail parks
Asset Quality
and Location
Prime dominant assets in their catchment areasLarge properties for their catchment (30,000 – 100,000 sqm)Located in high density population areas, with
Prime dominant assets in their catchment areasLarge properties for their catchment (30,000 – 100,000 sqm)Located in high density population areas, with
Segment Value added: Creating shopping experience destinationsValue added: Creating shopping experience destinations
Target Return Target levered1 >12%Target levered1 >12%
Ownership Ownership of 100% of each assetOwnership of 100% of each asset
1. This is a target only and not a profit forecast. There can be no assurance that this target can be or will be met
Well defined investment strategy27
Consolidate among the top 3 retail operators in Spain: Target to selectively increasing GLA to generate revenue synergies
1. Lar España Includes development projects (Palmas Altas and Vidanova Parc)
LAR España has a clear objective28
Spain Total Retail GLA by Size
Fit LRE Size and Value Added Strategy
15.5 M sqm
Value Added Opportunity
OpportunisticRegional
Prime
SCs fitting LRE’s strategy by size
SCs fitting LRE’s strategy by size and segment
4.5-6.0 M sqm
9.2 M sqm
Very Large15%
Large & Medium
47%Small10%
Retail Park12%
Other15%
Owned GLA Estimate % Ownership
1470,000
Peer 1
Peer 2
Lar España + Dev +Upcoming Acq
Peer 3
Peer 4
Peer 5
Peer 6
Peer 7
Peer 8
Peer 9
#1
N/A
80%Lar España +
Developments1#3
470,000 sqm, 850 shops, c.52 Mn visitors, 13 cities
The value of a retail platform29
Leaders
Critical Mass
Nation wide
Tenants Leverage
Experience & New Trends
Retail Leaders in Spain
Portfolio Size gives us benefits in:
Synergies in procurement of services
Global Negotiations with tenants
Present in most regions of the Spanish territory
Millions of physical and digital customer contacts
Attraction for the development of new commercial formulas
#1 Controlling Stake
#2 Investment Volumes
#3 GLA Acquired
Retail Approach30
GUADALAJARA8.5% RETAIL RENTS 3.4% RETAIL RENTS 3.1% RETAIL RENTS
GUADALAJARA2.6% RETAIL RENTS 2.3% RETAIL RENTS 2.0% RETAIL RENTS
GUADALAJARA2.9% RETAIL RENTS 2.7% RETAIL RENTS
GUADALAJARA1.9% RETAIL RENTS 1.8% RETAIL RENTS
Lar España targets to exploit revenue synergies of its growing retail portfolio
Tenants showing great interest in both our operating and under development assets
Outstanding Off-market deal-sourcing network
#3 Retail Player in Spain
1. Dominance ensures long term value and resilience to any future downturns
i. Lower competition: dominant assets often have no other competitor in the catchment area
ii. Barriers to entry: capital values prevent newer and larger developmentsiii. Greater impact of active management: Creation of unique shopping
experience destinations through repositioning especially impactful in those markets
Benefits of staying away from Madrid and Barcelona
2. Our operational track record shows the attractiveness of this approach
Retail 10-Top tenants
Know your Client Seeketing (beacons) Footfall Market Surveys
Contact with your Client
OtherSocial
NetworksYoutube
AppFacebook
TwitterWeb
Wi-Fi
Online/Offline Market Place Online Market Place Delivery Online Shopping
Omnichannel presence to enhance Shopping and Social Experience
Strong Technological Development
Number of units850 + 250 (Dev)
GLA350,000 sqm Operating
120,000 sqm Development
Footfallc.52 Mn
Sales growth +9.2%
vs National index 2.7%
EPRA Occupancy
92.6%
Market Value€847 Mn (Operating
Centres)
2 assets TDC1
€185 Mn under development
1. TDC – Total Development Cost including Acquisition Costs
Retail Portfolio Key Metrics32
33
REPOSITIONING
VALUE CREATION
52 MnAnnualized visitors
16% Rotation rate Since Acquisition
Average holding period 16.3 months
+4% Improvement in revenues of common areas
Since Acquisition
+4.9% NOISince Acquisition
Average holding period 16.3 months
+6.5% Footfall 9M 2016 vs
1.3% Avg. Footfall Index Spain
92.6% EPRA Occupancy +1p.p. vs FY 2015
+20,051 Sqm leasing activity9M 2016
+9.2% Sales vs +2.7% RetailSales index1 9M 2016
1. Source: INE
Retail Operating Performance33
34
New sources of value – Retail Developments
Asset Strategic Positioning
Best possible location in Seville → urban site Catchment area: 1.5 Mn people Low commercial offer in the area Sustainable, modern, family oriented
Rents and Leasing status Anchoring Phase: 25% of GLA pre-agreed by Dec´16 €14 Mn of annual rental income Expected opening – Q1 2019
Main figures Land acquisition cost: €36.0 Mn Expected development costs: €109 Mn NIY on Cost: >8%
Rents and Leasing status Leases signed with anchors: Leroy Merlin and Urban Planet c.60% of GLA signed and pre-signed €4 Mn of annual rental income Expected opening – Q1 2018
Main figures Land acquisition cost: €14.0 Mn Expected development costs: €26 Mn NIY on Cost: >9%
Asset Strategic Positioning Best possible location in Sagunto → urban site Touristic destination: triple population in Summer Balanced tenants mix, modern, family oriented
c.60%Pre-leased
>9%NIY
+25%Pre-agreement
>8%NIY
04 Non-Retail Strategy
Egeo Office Building, Madrid
Opportunistic approach to non retail assets
Focus on value add assets
Off market acquisitions Management as a key element to generate
value, leveraging on Grupo Lar’s platform “Assets that few players could find and
turnaround”
Focus on value add assets
Off market acquisitions Management as a key element to generate
value, leveraging on Grupo Lar’s platform “Assets that few players could find and
turnaround”
Asset Rotation
Selective asset rotation Based on generated return, strategic
importance (and the absence of economies of scale)
Asset Rotation
Selective asset rotation Based on generated return, strategic
importance (and the absence of economies of scale)
Development
Development with a moderate weight as a source of return
Always on selective locations with a leading proposition
Development
Development with a moderate weight as a source of return
Always on selective locations with a leading proposition
Core locations
Focus on liquid markets Luxury residential in Madrid Offices in Madrid and Barcelona Logistics in main markets (Madrid, Valencia) as a
good complement to retail
Core locations
Focus on liquid markets Luxury residential in Madrid Offices in Madrid and Barcelona Logistics in main markets (Madrid, Valencia) as a
good complement to retail
APPROACH
Opportunistically target offices and logistic assets
Assets to be rotated respecting SOCIMI status to fund further growth in retail and shareholder remuneration
36
Offices
MadridBarcelona
GAV Breakdown of Office assets
14% o/GAV
Egeo44%
Joan Miró13%
M. Spínola18%
Arturo Soria16%
Eloy Gonzalo9%
37
Consolidated locations in Madrid and Barcelona
Good Connections/ Public Transports
Recurrent activity with selective rotation
Strategy
Location10 Top-tenants by revenue generation
40.2%
7.6%
5.1%
3.7%
3.4%
3.3%
2.5%
2.5%
2.0%
1.8%
88.5% Occupancy
Ratio
Logistics38
GUADALAJARA63.3% LOGISTICS RENTS 17.1% LOGISTICS RENTS 8.1% LOGISTICS RENTS
GUADALAJARA8.1% LOGISTICS RENTS 2.9% LOGISTICS RENTS
5-Top tenants by revenue generation - High quality tenant base
Focus on logistic properties on a selective basis with low rents, low capital values and high yields
Strategy
Valencia
GAV Breakdown of Logistics assets
Alovera I 21%
Alovera II52%
Alovera III4%
Alovera IV11%
Almussafes12%
Guadalajara
Location
6% o/GAV
100% Occupancy
Ratio
Opportunistic Approach Off market transaction pursued by many players that failed to close due to the complexity and multi party
negotiations involved (Santander bank, creditors, shareholders, parking owners) Purchased at a highly attractive price, as market started to recover Development from scratch, leveraging on manager’s development expertise to modify initial product offering
to meet premium market needs
Asset Profile Location in Salamanca district, most exclusive area in Madrid Stand-alone building, providing excellent natural light and ventilation options for all units 20,885 sqm above ground in LGSC99, 42 residential units, new underground parking Unique common areas unseen in the Spanish market: indoor and outdoor pools, spa, gym, meeting rooms The property will be the most exclusive residential development in Madrid since 2006
1. (Corresponds to 50% of the JV with Pimco
LocationLagasca 99 & Juan Bravo 3, Madrid
Construction Period2016 - 2018
Pre-sales43%
Total GLA26,203 Sqm
Acquisition Price1
EUR 50 Mn
€/Sqm3,807 €/Sqm
Asset Characteristics
39
43% sold off market
Commercial success of “off market“ commercialization, committing more than 43% of the product and with an impact on the sales over the initial estimate (10,000 €/sqm)
Full marketing campaign launched in October
Residential
05 Financial Results – 9M 2016
Egeo Office Building, Madrid
GAV 1
Tenants Sales Growth outperforming the market9M 2016
Net LTV2
Rental Income
Footfall outperforming the market9M 2016
EPRA Occupancy Rate
EPRA Earnings
41
€1,201 Mn
+9.2%
35% 2.24% Cost of Debt
€42.2 Mn
+6.5%
1. Total GAV = Valuation of assets as of 30th June + Gran Vía de Vigo + invested Capex (€10 Mn)2. Net LTV as of 30 September 2016 3. Includes only operating assets generating rents by the end of September 20164. Indicators calculated using the figures from the last 12 months
+80% vs Q3 2015
+71% vs Q3 2015
92.8%
5.8% EPRA Net Initial Yield
EPRA NAV (€ ‘000s)
EPRA Annualised Net Rent3
€757.9
€62.7 Mn
€8.4 EPRA NAVper share
34.6% EPRA Cost Ratio
6.1% EPRA “topped-up” NIY
€18.8 xMn
+56% vs 9M 2015
10% ROE4 6% ROA4
9M 2016 Highlights
42
Financial Results
Business Performance
Corporate Highlights
1. Average holding period: 19 months.
9M 2016 Operational and Financial Results Rental Income of €42.2 Mn
Annualised Gross rent of €70
Mn
EBITDA of €30.3 Mn
Net Profit of €46.6 Mn
+80%vs Q3 2015
+123% vs Q3 2015
+77% vs Q3 2015
+77% vs Q3 2015
GAV of €1,201 Mn
EPRA earnings of €18.8Mn
EPRA NAV of €757.9 Mn
+71% vs Q3 2015
+56% vs Q3 2015
+31%vs Dec 2015
Intense asset management: 20,051 Sqm leased in 9M 2016 14% €/sqm higher. Re-tenanting of
7,330 Sqm, improving tenant mix and at 19% €/sqm higher
Retail EPRA Occupancy 92.6% / Retail tenant Sales +9.2% in Q3 2016
Sales per visitor +3% and strong growth in the assets located in touristic areas
Retail NOI +4.9% in 9M 2016 since acquisition1 driven by rental price recovery and reduction in
discounts
Acquisition of Gran Vía de Vigo for €141 Mn, a prime dominant shopping centre
Q3 LTV of 35% with a cost of debt of 2.24%
Active asset management with targeted capex of €10.5 Mn:
Retail €5.5 Mn; Logistic €0.2 Mn; Offices €4.8 Mn
Consolidated Income Statement (€ Million)
9M 2016 9M 2015Chg (%)
9M16/9M15
Total Total
Rental Income 42.2 23.5
Property Operating Results 31.4 17.5
EBITDA1 30.8 17.2
Changes in the Fair Value 29.1 11.9
EBIT1 59.8 29.1
EBT 47.0 26.3
Profit for the Period (*) 47.0 26.3
FFO (EBITDA – Financial Result) 23.0 13.0
% FFO Annualized Yield /NAV 4.04% 3.16%
Profit for the Period (post accounting provisions)
46.6 26.3 +76.8%
1. pre performance fee
1.5
26.3
46.6
9M14 9M15 9M16
3.8
23.5
42.2
9M14 9M15 9M16
-0.5
17.2
30.8
9M14 9M15 9M16
3.5
12.1
18.8
9M14 9M15 9M16
Revenues
Net Profit
EBITDA
EPRA Earnings
+79.4%
+79.4%
+105.7%
+78.5%
+78.5%
43
9M 2016 P&L
€M
€M €M
€M
1 7 23 36
91
3154
294
1 Year 2 Years 3 Years 4 Years 5 Years 6 Years > 6 Years
€140Mn Senior Secured Bond€315Mn Bank Debt
€ Mn
Back-loaded Amortization Profile
35%1 Net Loan to Value (LTV1)
2.24% Average Cost of Debt2
6.8x Interest Cover Ratio (ICR)
6.9 Y Debt WALT
Key Figures of the financing as of 30 September 2016
Diversification of sources
€455Mn€455Mn
Bank Debt69%
Hedge/Fixed 78%
Variable 22%
Corporate Bond31%
44
Debt
1. Net LTV as of September 2016; Net LTV= Total Loans & Borrowings & Notes net of Cash2. Excluding any impact from negative interest rate
05 Closing Remarks
Marcelo Spínola Office Building, Madrid
46
Unique exposure to real estate retail assets and the Spanish consumer recovery
Resilient prime dominant shopping centres in attractive catchment areas
Recurrent cash flow generation from a 5.8% Net Initial Yield
Upside potential from acquisitions done at attractive capital values with potential for revaluation
Upside from our value added approach including repositioning and selectively development to create unique shopping experience destinations
A complementary opportunistic approach on logistics and office investments
Proven recurrent access to off-market transactions
Top management team with strong track record and delivering results
Digital 360º project aimed at linking and enhancing off line and on line retail platform
Investment Opportunity Value is our DNA
Closing Remarks
47
Key targets & assumptions 2017-2020
1. In accordance with EPRA BPR
Business Plan Assumptions Expected2016 End
Expected Average Growth per annum
Annualized GRI c. €70 Mn c. 14%
Annualized NOI1 c. €63 Mn c. 15%
Non Recoverable/ GRI Expenses 10% c. -10% (till 7% target)
Occupancy 93% c. 1% (till 97% target)
Return TargetsExpected2016 End
Expected Average Growthper annum
Total Annual Return >12% >12%
NAV c. €780 Mn c. 9-10%
48
Dividends
Dividend Yield
2016
More than 4%1 over NAV (> 5% on current Market Cap)
2017 - Onwardsc. 5% over NAV
Extraordinary dividendsLagasca 99 delivery
Other divestments, according to the Business Plan execution and conditions
Predictable and sustainable dividend and distribution schedule Competitive in the International Real Estate market Attractive vs Spanish equity market As a result of a solid cash flow generation
1
2
Dividend policy objectives
1. 4% Dividend yield over Average of 2016 quarterly NAV
49
Going forward
RIGHT TIMINGCycle
Opportunity
RIGHT RESOURCESOperational
FinancialKnow-How
RIGHT PLATFORMSize
SynergiesDevelopments
Rotation potential
RESULTSOperation
RevaluationDividends
1 2
3
07 Appendix - Assets
Anec Blau Shopping Centre, Barcelona
RETAIL COMPLEXMegapark, Bilbao
LocationBilbao
GLA63,555 Sqm
Purchase Date19 October 2015
WAULT2.8 years
51
Acquisition PriceEUR 170.0 Mn
Market Value (June 2016)EUR 178.0 Mn
EPRA NIY5.7%
EPRA Occupancy Rate92.0%
SHOPPING CENTREGran Vía de Vigo, Pontevedra
LocationVigo, Pontevedra
GLA41,386 Sqm
Purchase Date15 September 2016
WAULT-
52
Acquisition PriceEUR 141.0 Mn
Market Value (June 2016)-
EPRA NIY6.2%
Occupancy Rate95.5%
53
SHOPPING CENTREEl Rosal, León
LocationPonferrada, León
GLA51,022 Sqm
Purchase Date7 July 2015
WAULT2.5 years
Acquisition PriceEUR 87.5 Mn
Market Value (June 2016)EUR 93.3 Mn
EPRA NIY6.7%
EPRA Occupancy Rate92.4%
SHOPPING CENTREPortal de la Marina, Alicante
LocationOndara, Alicante
GLA40,066 Sqm
Purchase Date30 Oct ’14/ 9 Jun ’15/ 30 Mar ‘16
WAULT2.7 years
54
Acquisition Price1
EUR 89.2 Mn
Market Value (June 2016)EUR 99.3 Mn
EPRA NIY6.8%
EPRA Occupancy Rate93.5%
1. Weighted average price of acquisitions
SHOPPING CENTREAnec Blau, Barcelona
LocationBarcelona
GLA28,612 Sqm
Purchase Date31 July 2014
WAULT3.1 years
55
Acquisition PriceEUR 80.0 Mn
Market Value (June 2016)EUR 87.5 Mn
EPRA NIY5.4%
EPRA Occupancy Rate94.2%
SHOPPING CENTREAs Termas, Lugo
LocationLugo
GLA35,127 Sqm
Purchase Date15 Apr ‘15/ 28 Jul ‘15
WAULT2.2 years
56
Acquisition PriceEUR 68.8 Mn
Market Value (June 2016)EUR 74.0 Mn
EPRA NIY6.7%
EPRA Occupancy Rate92.9%
RETAIL PARKVistahermosa, Alicante
LocationAlicante
GLA33,550 Sqm
Purchase Date16 June 2016
WAULT6.5 years
57
Acquisition PriceEUR 42.5 Mn
Market Value (June 2016)EUR 42.5 Mn
EPRA NIY5.9%
EPRA Occupancy Rate87.6%
SHOPPING CENTREPalmas Altas, Seville
LocationSeville
Retail and family leisure space123,000 Sqm
Purchase Date1 March 2016
Expected Opening DateQ1 2019
58
Acquisition PriceEUR 36.0 Mn
Market Value (June 2016)EUR 40.7 Mn
Expected NIY> 8%
Expected development costsEUR 109.0 Mn
SHOPPING CENTREAlbacenter, Albacete
LocationAlbacete
GLA27,890 Sqm
Purchase Date30 Jul ’14/ 19 Dec ‘14
WAULT1.8 years
59
Acquisition PriceEUR 39.9 Mn
Market Value (June 2016)EUR 46.1 Mn
EPRA NIY6.0%
EPRA Occupancy Rate90.4%
SHOPPING CENTRETxingudi, Guipúzcoa
LocationIrún, Guipúzcoa
GLA10,127 Sqm
Purchase Date24 March 2014
WAULT3.0 years
60
Acquisition PriceEUR 27.7 Mn
Market Value (June 2016)EUR 32.0 Mn
EPRA NIY6.5%
EPRA Occupancy Rate86.3%
RETAIL PARKVidanova Parc, Valencia
LocationSagunto, Valencia
GLA44.252 Sqm
Purchase Date3 August 2014
Expected Opening DateQ1 2018
61
Acquisition PriceEUR 14.0 Mn
Market Value (June 2016)EUR 16.1 Mn
Expected NIY> 9%
Expected development costsEUR 26.0 Mn
SHOPPING CENTRELas Huertas, Palencia
LocationPalencia
GLA6,267 Sqm
Purchase Date24 March 2014
WAULT2.2 years
62
Acquisition PriceEUR 11.7 Mn
Market Value (June 2016)EUR 12.0 Mn
EPRA NIY6.4%
EPRA Occupancy Rate78.3%
RETAIL PARKNuevo Alisal, Santander
LocationSantander
GLA7,649 Sqm
Purchase Date17 December 2014
WAULT3.3 years
63
Acquisition PriceEUR 17.0 Mn
Market Value (June 2016)EUR 17.5 Mn
EPRA NIY6.5%
EPRA Occupancy Rate100.0%
RETAIL PARKVillaverde, Madrid
LocationMadrid
GLA4,391 Sqm
Purchase Date29 July 2014
WAULT6.1 years
64
Acquisition PriceEUR 9.1 Mn
Market Value (June 2016)EUR 10.4 Mn
EPRA NIY6.5%
EPRA Occupancy Rate100.0%
RETAIL PARKGalaria, Pamplona
LocationPamplona
GLA4,108 Sqm
Purchase Date23 July 2015
WAULT5.2 years
65
Acquisition PriceEUR 8.4 Mn
Market Value (June 2016)EUR 9.8 Mn
EPRA NIY6.7%
EPRA Occupancy Rate100.0%
OFFICESEgeo, Madrid
LocationMadrid
GLA18,254 Sqm
Purchase Date16 December 2014
WAULT4.7 years
66
Acquisition PriceEUR 64.9 Mn
Market Value (June 2016)EUR 71.9 Mn
EPRA NIY1.7%
EPRA Occupancy Rate91.5%
OFFICESMarcelo Spínola, Madrid
LocationMadrid
GLA8,586 Sqm
Purchase Date31 July 2014
Expected Yield> 7.5%
67
Acquisition PriceEUR 19.0 Mn
Market Value (June 2016)EUR 27.0 Mn
Redevelopment CapexEUR 9.6 Mn
Total cost per Sqm.EUR 3,222/Sqm
OFFICESArturo Soria, Madrid
LocationMadrid
GLA8,663 Sqm
Purchase Date29 July 2014
WAULT2.6 years
68
Acquisition PriceEUR 24.2 Mn
Market Value (June 2016)EUR 26.0 Mn
EPRA NIY4.8%
EPRA Occupancy Rate78.1%
OFFICESJoan Miró, Barcelona
LocationBarcelona
GLA8,611 Sqm
Purchase Date11 June 2015
WAULT1.3 years
69
Acquisition PriceEUR 19.7 Mn
Market Value (June 2016)EUR 21.0 Mn
EPRA NIY5.6%
EPRA Occupancy Rate99.1%
OFFICESEloy Gonzalo, Madrid
LocationMadrid
GLA6,231 Sqm
Purchase Date23 December 2014
WAULT1.8 years
70
Acquisition PriceEUR 12.7 Mn
Market Value (June 2016)EUR 14.0 Mn
EPRA NIY2.2%
EPRA Occupancy Rate80.1%
LOGISTICSAlovera II, Guadalajara
LocationGuadalajara
GLA83,952 Sqm
Purchase Date13 October 2014
WAULT1.0 years
71
Acquisition PriceEUR 32.1 Mn
Market Value (June 2016)EUR 37.4 Mn
EPRA NIY6.2%
EPRA Occupancy Rate100.0%
LOGISTICSAlovera I, Guadalajara
LocationGuadalajara
GLA35,195 Sqm
Purchase Date7 October 2014
WAULT2.2 years
72
Acquisition PriceEUR 12.7 Mn
Market Value (June 2016)EUR 15.0 Mn
EPRA NIY7.2%
EPRA Occupancy Rate100.0%
LOGISTICSAlmussafes, Valencia
LocationValencia
GLA19,211 Sqm
Purchase Date26 May 2015
WAULT3.2 years
73
Acquisition PriceEUR 8.4 Mn
Market Value (June 2016)EUR 8.8 Mn
EPRA NIY7.9%
EPRA Occupancy Rate100.0%
LOGISTICSAlovera IV (C5-C6), Guadalajara
LocationGuadalajara
GLA14,891 Sqm
Purchase Date26 May 2015
WAULT2.6 years
74
Acquisition PriceEUR 7.2 Mn
Market Value (June 2016)EUR 7.9 Mn
EPRA NIY8.9%
EPRA Occupancy Rate100.0%
LOGISTICSAlovera III, Guadalajara
LocationGuadalajara
GLA8,591 Sqm
Purchase Date26 May 2015
WAULT0.3 years
75
Acquisition PriceEUR 3.0 Mn
Market Value (June 2016)EUR 3.3 Mn
EPRA NIY7.4%
EPRA Occupancy Rate100.0%
RESIDENTIALLagasca 99, Madrid
LocationMadrid
GLA26,203 Sqm
Purchase Date30 January 2015
76
Acquisition Price1
EUR 50.1 Mn
Market Value (June 2016)EUR 58.3 Mn
Construction Period2016 - 2018
1. Corresponds to the 50% of the JV with PIMCO
Disclaimer
77
This document has been prepared by Lar España Real Estate SOCIMI, S.A. (the “Company”) for information purposes only and it is not a regulated information or information which has been subject to prior registration or control by the SpanishSecurities Market Commission. This document neither is a prospectus nor implies a bid or recommendation for investment. This document includes summarised audited and non-audited information. The financial and operational information, as well asthe data on the acquisitions which have been carried out, included in the presentation, correspond to the internal recordings and accounting of the Company. Such information may in the future be subject to audit, limited review or any other control byan auditor or an independent third party. Therefore, this information may be modified or amended in the future.
The information contained herein has been obtained from sources that the Company considers reliable, but the Company does not represent or warrant that the information is complete or accurate, in particular with respect to data provided by thirdparties (including certain information relating to the Company’s properties such as their catchment areas and performance indicators for periods preceding the time of acquisition by the Company). Neither the Company nor its legal advisors andrepresentatives assure the completeness, impartiality or accuracy of the information or opinions included herein. In addition, they do not assume responsibilities of any kind, whether for misconduct or negligence, with regard to any damages or lossesthat may derive from the use of this document or its contents. The information contained in this document has not been subject to independent verification. This document includes forward-looking representations or statements on purposes,expectations or forecasts of the Company or its management up to the date of release of this document. Said forward-looking representations and statements or forecasts are mere value judgments of the Company and do not imply undertakings offuture performance. Additionally, they are subject to risks, uncertainties and other factors, which were unknown or not taken into account by the time this document was produced and released and which may cause such actual results, performance orachievements, to be materially different from those expressed or implied by these forward-looking statements. Moreover, these forward-looking statements are based on numerous assumptions (which are not stated in the presentation) regarding theCompany’s present and future business strategies and the environment in which the Company expects to operate in the future. There are many factors, most of them out of the Company’s control, such as the termination of the Company’s InvestmentManager Agreement with Grupo Lar Inversiones Inmobiliarias, S.A. (“Grupo Lar”) or adverse developments in the Spanish economy, which may cause the Company’s actual operations and results to substantially differ from those forward-lookingstatements.
Under no circumstances the Company undertakes to update or release the review of the information included herein or provide additional information. Neither the Company nor any of its legal advisors or representatives assume any kind ofresponsibility for any possible deviations that may suffer the forward-looking estimates, forecasts or projections used herein.
THIS INFORMATION DOES NOT CONSTITUTE OR FORM PART OF ANY OFFER TO SELL OR ISSUE, OR INVITATION TO PURCHASE OR SUBSCRIBE FOR, OR ANY SOLICITATION OF ANY OFFER TO PURCHASE OR SUBSCRIBE FOR,ANY SECURITIES OF THE COMPANY, NOR SHALL THE FACT OF ITS DISTRIBUTION FORM THE BASIS OF, OR BE RELIED ON IN CONNECTION WITH, ANY CONTRACT OR INVESTMENT DECISION. THIS PRESENTATION SHOULDNOT BE CONSIDERED AS A RECOMMENDATION BY THE COMPANY, GRUPO LAR OR ANY OTHER PERSON THAT ANY PERSON SHOULD SUBSCRIBE FOR OR PURCHASE ANY SECURITIES OF THE COMPANY. PROSPECTIVEPURCHASERS OF SECURITIES OF THE COMPANY ARE REQUIRED TO MAKE THEIR OWN INDEPENDENT INVESTIGATION AND APPRAISAL.
The securities of the Company have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act") or the laws of any state or other jurisdictions of the United States. Such securities may not be offeredor sold in the United States except on a limited basis, if at all, to Qualified Institutional Buyers (as defined in Rule 144A under the US Securities Act) in reliance on an exemption from, or transaction not subject to, the registration requirements of the U.S.Securities Act. The securities of the Company have not been and will not be registered under the applicable securities laws of any state or jurisdiction of Australia, Canada, Japan or Switzerland and, subject to certain exceptions, may not be offered orsold within Australia, Canada, Japan or Switzerland or to or for the benefit of any national, resident or citizen of Australia, Canada, Japan or Switzerland.
The information contained herein does not purpose to be comprehensive or to contain all the information that a prospective purchaser of securities of the Company may desire or require in deciding whether or not to purchase suchsecurities.
This document discloses neither the risks nor other material issues regarding an investment in the securities of the Company. The information included in this presentation is subject to, and should be read together with, all publicly available information.Any person acquiring securities of the Company shall do so on their own risk and judgment over the merits and suitability of the securities of the Company, after having received professional advice or of any other kind that may be needed or appropriatebut not only on the grounds of this presentation. By delivering this presentation, the Company is not providing any advisory, purchase or sale recommendation, or any other instrument of negotiation over the securities or financial instruments of theCompany. This document does not constitute an offer, bid or invitation to acquire or subscribe securities, in accordance with the provisions of article 35 of the consolidated text of the Spanish Securities Market Act approved by the Royal LegislativeDecree 4/2015, of 23 October, and/or the Royal Decree 1310/2005, of 4 November and their implementing regulations. Furthermore, this document does not imply any purchase or sale bid or offer for the exchange of securities or a request for the voteor authorization in any other jurisdiction. The delivery of this document within other jurisdictions may be forbidden.
Recipients of this document or those persons receiving a copy thereof shall be responsible for being aware of, and complying with, such restrictions.
By accepting this document you are accepting the foregoing restrictions and warnings.
All the foregoing shall be taking into account by those persons or entities which have to take decisions or issue opinions relating to the securities issued by the Company. All such persons or entities are invited to consult all public documents andinformation of the Company registered within the Spanish Securities Market Commission.
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